Applied Digital’s analyst price target has surged from $27 to $43.70 per share as analysts cite robust pipeline growth, major contract wins, and sector tailwinds as key drivers for the substantial uplift.

Analyst Commentary

Recent research notes show a surge in optimism around Applied Digital, as well as some caution tied to execution risks as the company scales. The following summarizes the main bullish and bearish themes in current analyst perspectives:

• Bullish analysts highlight major contract wins, particularly large-scale and long-term agreements in the AI data center sector, as key to near- and long-term revenue visibility.
• The company is seen as exceptionally well positioned in the growing AI infrastructure market, with an active pipeline totaling several gigawatts across new and prospective facilities.
• Facility development and strategic financing arrangements are viewed as enabling aggressive expansion with minimal dilution. This is seen as unlocking significant capital for future campuses.
• Control of power resources and colocation capacity is considered a significant strategic advantage. This positions Applied Digital favorably as scarcity of power and land for data centers becomes more acute.

• Bearish analysts point to recent earnings benefiting from one-time revenue contributions, calling into question the consistency of future quarters.
• Ongoing success is seen as increasingly dependent on execution of new leases and continued demand from AI hyperscale customers.
• There is some concern regarding the company’s valuation, now largely supported by projected leasing activity and future development assumptions rather than realized results.

What's in the News

• Signed a lease agreement with an investment-grade U.S. hyperscaler for 200MW of critical IT load at Polaris Forge 2 Campus. This agreement totals approximately $5 billion in contracted revenue over 15 years and includes the first right of refusal on an additional 800MW (Key Developments).
• Secured a new lease with CoreWeave for an additional 150MW at Polaris Forge 1 Campus, raising total contracted lease revenue to roughly $11 billion. This amount includes previous long-term agreements (Key Developments).
• Raised $50 million in funding through a private placement with participation from Macquarie Equipment Capital Inc., issuing a promissory note bearing an 8% annual interest rate plus 1.50% per month (Key Developments).
• Announced plans to break ground on Polaris Forge 2, a $3 billion, 280MW AI Factory in North Dakota. Full campus capacity is anticipated in early 2027, with the potential to scale beyond 280MW (Key Developments).

Valuation Changes

• The consensus analyst price target has increased significantly from $27 to $43.70 per share, reflecting heightened growth expectations.
• The discount rate has decreased marginally from 9.10% to 9.07%, indicating a slight reduction in perceived risk.
• Revenue growth projections have risen from 73.7% to 79.9%, suggesting greater anticipated top-line expansion.
• Net profit margin has declined from 13.5% to 9.0%, pointing to expectations of lower profitability in the near term.
• The future price-to-earnings (P/E) ratio has nearly doubled from 109.8x to 212.7x, indicating a higher valuation multiple on anticipated future earnings.